A ‘Revenue-Neutral’ Carbon Dioxide Tax Is a Lie

Jay Lehr, Ph.D. is an internationally renowned speaker, scientist, and author who has testified before Congress on more than three dozen occasions on environmental issues, and consulted with nearly every agency of the federal government and with many foreign countries. Dr. Lehr is the author of more than 1,000 magazine and journal articles and 30 books.

Global warming activists attempt to win over conservatives by claiming a carbon dioxide tax can be “revenue neutral.” By rebranding a carbon dioxide tax as a “fee and dividend,” with all carbon dioxide tax revenue returned to taxpayers, global warming activists hope to win over enough conservatives and Republicans to gain majority support for a tax. A quick review of activist plans for the collection of carbon dioxide tax revenues reveals a carbon dioxide tax is simply another means for leftists to grow government, fund new leftist programs, and redistribute wealth.

Despite calls for a “revenue-neutral” carbon dioxide tax, there is no such thing as a “household-income-neutral” carbon dioxide tax. The point of a carbon dioxide tax is to impose such high costs on conventional power that it becomes even more expensive than expensive wind and solar power. According to tax proponents, when carbon dioxide taxes are sufficiently high, power generation will come exclusively from wind and solar sources. Then, when power generation comes from expensive wind and solar power, no carbon dioxide tax would be collected.

The added financial burden imposed on American households by a carbon dioxide tax will take the form of higher energy bills — for which there will be no government compensation — rather than revenues collected and returned by government. Consumers will be stuck with much-higher energy bills, with no returned tax “dividend” to soften the blow.

Carbon dioxide taxes would also be imposed on gasoline, and there are currently no low-emission transportation fuel alternatives to gasoline. How high would gasoline prices rise under a carbon dioxide tax? The plan proposed by the Citizens Climate Lobby, a group that advocates a revenue-neutral carbon dioxide tax, would add more than a dollar per gallon to the price of gasoline during the next six years and more than $2 per gallon during the next 12 years.

When global warming activists tell conservatives and Republicans that all revenues collected under a carbon dioxide tax can be returned to taxpayers via a reduction in other taxes or a dividend distribution, their actions tell a completely different story. Their goal is to first get conservatives and Republicans to sign on to the idea of a carbon dioxide tax, and then to force conservatives to negotiate away the economic principles that would govern tax revenue collection and distribution.

Take, for example, a proposed carbon dioxide tax that was presented to Washington State voters on the 2016 ballot. The ballot initiative would have reduced other taxes to mitigate against the revenue collected under a carbon dioxide tax. Under strong opposition to the initiative from the environmental left, voters rejected the carbon dioxide tax. Why? Precisely because the tax was designed to be “revenue neutral.” Environmental activist groups and the Democratic Party refused to support a carbon dioxide tax that did not increase government revenues and spend those revenues on liberal causes and environmental social justice programs.

Heading into this November’s elections, another carbon dioxide tax is on the Washington State ballot. This time, there will not be a revenue-neutral rebate to taxpayers. Instead, all the money collected via the carbon tax will be spent on government programs, with the majority going to renewable energy subsidies. Liberal priorities and other social justice programs also receive funding under the tax. In short, this year’s carbon tax initiative is a bait-and-switch targeting Republicans and misguided conservatives who supported the 2016 tax. The environmental left hopes enough Republicans are roped in by their previous support of the revenue-neutral carbon dioxide tax to support this year’s bait-and-switch version.

It is not just in Washington State that climate activists and the environmental left have ulterior motives for carbon dioxide tax revenues. Perhaps the most deceitful is the Citizens Climate Lobby. The Citizens Climate Lobby claims to represent a bipartisan center ground regarding climate action. The Lobby advocates a “carbon-fee-and-dividend” tax that it claims is revenue-neutral. A look at the “fee-and-dividend” details, however, reveals the liberal agenda and wealth redistribution policy goals of the Citizens Climate Lobby.

According to the Citizens Climate Lobby, “the wealthiest 20 percent of the population spends 3.6 times as many dollars on fossil energy as the least wealthy 20 percent, and thus would generate 3.6 times as many carbon fee dollars per person.” As a result,“low-income Americans, who typically use less energy, will come out ahead 90 percent of the time” under its revenue-neutral carbon dioxide tax. That is Redistribution Economics 101.

Moreover, the Citizens Climate Lobby, while telling Republicans it supports the idea of a revenue-neutral carbon dioxide tax, campaigns for big-government, leftist-oriented carbon dioxide taxes like the one on the ballot this year in Washington State. Revenues from the proposed Washington carbon dioxide tax “will be spent on programs that help the poor and reduce emissions, but that also grow government,” the Citizens Climate Lobby acknowledges.

Despite the liberal agenda underlying and advanced by the proposed Washington State carbon dioxide tax, “at the state level, we are supporting bills that match our values even if they are not revenue neutral,” states the Citizens Climate Lobby website. “In fact, passing state legislation that differs from our national policy puts pressure on Congress to act.… It also pressures conservative members of Congress to enact a revenue neutral carbon price before progressive states pass revenue positive bills. Ironically, differing from our policy at the state level will help pass our policy in Congress.”

Not only is the Citizens Climate Lobby “supporting” the revenue-enhancing Washington State carbon dioxide tax and its diversion of tax revenues to leftist causes, its staff members traveled to Washington State and actively collected signatures to put the carbon dioxide tax on the ballot.

Surprisingly, quite a few Republican policymakers have joined forces with the Citizens Climate Lobby. In 2016, Citizens Climate Lobby staffers approached two members of Congress and convinced them to launch a congressional Climate Solutions Caucus. The Caucus is billed as a bipartisan group of Congress members supporting “economically-viable options to reduce climate risk.” Two years later, 42 Republican members of Congress have joined the Caucus. The joint Citizens Climate Lobby/Climate Solutions Caucus website praises Caucus members for opposing offshore energy production and opposing energy production in the Arctic National Wildlife Refuge and directs viewers to the Citizens Climate Lobby website.

The Citizens Climate Lobby is not alone in its desire to turn a carbon dioxide tax into a government grab-bag for progressives and the environmental left. Bill McKibben, who is one of the most visible leaders of the climate activist community, writes that a carbon dioxide tax is not acceptable without a powerful redistributionist agenda. McKibben calls for revenues collected via a carbon dioxide tax to be redistributed to “poor people, people of color, and Native nations, both in our country and around the world.” In other words, carbon dioxide tax revenues taken from American citizens should be largely given away to other nations.

Moreover, McKibben calls for carbon dioxide tax revenues to be distributed disproportionately to illegal immigrants. Writes McKibben, “any such rebates shouldn’t overlook the estimated nearly 12 million undocumented Americans who contribute to the economy — and cause far less than their proportional share of emissions. Environmental justice would mean a truly ‘fair’ system compensated them for that history.”

This brings us back to square one. Even though a truly revenue-neutral carbon dioxide tax would still impose tremendous costs on American households via uncompensated higher energy costs, the leftist environmental groups who are the main instigators for a carbon dioxide tax will never accept one that does not grow government and government revenues and advance a redistributionist agenda inside and outside America’s borders. Any conservative or Republican who believes otherwise is engaging in wishful and delusional thinking.

Further, by pledging allegiance to a supposedly “revenue-neutral” carbon dioxide tax, conservatives and Republicans would set the table for a political dialogue in which a carbon dioxide tax is already a given, but then conservatives and Republicans would also be boxed into a corner in which they would be forced to bargain away conservative economic and political principles.

Ultimately, the small number of liberal Republicans who support a carbon dioxide tax do so not because they believe the tax will benefit the economy; they support it because they have bought into Al Gore’s climate alarmism and grasp for any straw that might trick conservatives and fellow Republicans into advancing Gore’s global warming agenda. This is particularly foolish considering that more than 12 years after Gore’s Hollywood movie An Inconvenient Truth, none of his predictions have come to pass. Earth is warming at a much slower pace than Gore predicted. The polar ice caps still exist and are essentially the same size as they were in 2006. Extreme weather events show no sign of becoming more frequent or severe. The United States recently underwent its longest period in history without a major hurricane strike (Category 3 or higher). Tornado activity—especially Category 3 or stronger tornadoes—are in long-term decline. Global crop production sets new records virtually every year.

Is a revenue-neutral carbon dioxide tax compatible with conservative principles? Not even close. The idea of a revenue-neutral carbon dioxide tax is merely a bright, shiny object designed to lure conservatives and Republicans into abandoning free-market economic and political principles while buying into Al Gore’s pet environmental obsession. Republicans shouldn’t be fooled into believing otherwise.